Intuit Inc. recently released its Q2 fiscal 2025 results (with the fiscal year ending in July), surpassing analysts’ expectations for both revenue and earnings. The company posted revenue of $3.96 billion and adjusted earnings per share of $3.32, compared to consensus estimates of $3.83 billion and $2.58, respectively. Strong demand for its AI-powered tools contributed to the robust performance. As a result, INTU stock surged after the announcement.
However, despite the recent positive momentum, INTU stock—down 10% since the beginning of 2024—has underperformed the S&P 500, which is up 28%. This lag in performance is due to the company’s pessimistic guidance from the previous quarter. If you prefer an investment with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved over 91% returns since inception.
Intuit’s revenue of $4.0 billion in Q2 represented a 17% year-over-year increase. Segment performance varied: the Global Business Solutions Group grew by 21% to $2.9 billion, Credit Karma sales increased by 36% to $511 million, Consumer Group sales rose by 3% to $509 million, while ProTax Group revenue declined by 1% to $272 million.
The company benefited from improved pricing and customer growth. Intuit’s adjusted operating margin increased by 370 basis points year-over-year to 31.8% in Q2. Combined with higher revenue, this resulted in earnings per share of $3.32, up from $2.50 in the same quarter last year. Looking ahead, Intuit maintained its full-year outlook, projecting revenue between $18.16 billion and $18.35 billion, and adjusted earnings per share between $19.16 and $19.36.
After the earnings announcement, INTU stock was up 8% in pre-market trading. However, it is important to note that INTU stock has been highly volatile in recent years, with annual returns that are much less consistent than those of the S&P 500. The stock returned 70% in 2021, -39% in 2022, 62% in 2023, and 1% in 2024.
In contrast, the Trefis High Quality Portfolio, which consists of 30 stocks, is significantly less volatile. It has comfortably outperformed the S&P 500 over the past four years. Why is that? Collectively, HQ Portfolio stocks delivered better returns with lower risk compared to the benchmark index, offering a less volatile ride, as demonstrated by the HQ Portfolio performance metrics.
Considering the current uncertain macroeconomic environment surrounding rate cuts and ongoing trade wars, might INTU experience a scenario similar to that of 2022 and 2024 and underperform the S&P 500 over the next 12 months — or will it see a significant jump? From a valuation standpoint, we believe that INTU stock has substantial room for growth.
Trading at approximately $600 in pre-market, INTU stock currently has a price-to-sales ratio of 10.3x, slightly below its five-year average of 10.7x. Given the company’s strong Q2 results, robust sales growth, and expanding margins, a higher valuation multiple than the historical average appears justified. Therefore, despite the recent price increase, we see further growth potential in INTU stock.
While INTU stock seems to have growth potential, it is useful to observe how Intuit’s Peers perform on key metrics. Additional valuable comparisons for companies across various industries are available at Peer Comparisons.
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